Cheney Was Right About One Thing: Deficits Don't Matter

Wednesday 27 April 2011
by: Ellen Brown, Truthout

Deficit terrorists" are gutting governments and forcing the privatization of public assets, all in the name of "deficit reduction." But deficits aren't actually a bad thing. In today's monetary scheme, in which most money comes from debt, debt and deficits are actually necessary to have a stable money supply. The public debt is the people's money.

Former Vice President Dick Cheney famously said, "Deficits don't matter." A staunch Republican, he was arguing against raising taxes on the rich; but today, Republicans seem to have forgotten this maxim. They are bent on stripping social programs, privatizing public assets and gutting unions, all in the name of "deficit reduction."

Worse, Standard & Poor's has now taken up the hatchet. Some bloggers are calling itblackmail. This private, for-profit rating agency, with a dubious track record of its own, is dictating government policy, threatening to downgrade the government's long-held triple AAA credit rating if Congress fails to deal with its deficit in sufficiently draconian fashion. The threat is a real one, as we've seen with the devastating effects of downgrades in Greece, Ireland, and other struggling countries. Lowered credit ratings force up interest rates and cripple national budgets.

The biggest threat to the dollar's credit rating, however, may be the game of chicken being played with the federal debt ceiling. Nearly70 percentof Americans are said to be in favor of a freeze on May 16, when the ceiling is due to be raised; and Tea Party-oriented politicians could go along with this scheme to please their constituents.

If they get what they wish for, the party could be over for the whole economy. The Chinese are dumping US Treasuries and the Fed is backing off from its "quantitative easing" program, in which it has been buying federal securities with money simply created on its books. When the Fed buys Treasuries, the government gets the money nearly interest-free, since the Fed rebates itsprofitsto the government after deducting its costs. When the Chinese and the Fed quit buying Treasuries, interest rates are liable to shoot up; and with a frozen debt ceiling, the government would have to default, since any interest increase on a $14 trillion debt would be a major expenditure. Today, the Treasury is paying a very low .25 percenton securities of nine months or less, and interest on the whole debt is about 3 percent (a total of$414 billionon a debt of $14 trillion in 2010). Greece is paying4.5 percenton its debt, and Venezuela is paying18 percent- six times the 3 percent we're paying on ours. Interest at 18 percent would add $2 trillion to our tax bill. That would mean payingthree timeswhat we're paying now in personal income taxes (projected to be a total of$956 billionin 2011), just to cover the interest.

There are other alternatives. Congress could cut the military budget - but it probably won't, since this option is never even discussed. It could raise taxes on the rich, but that probably won't happen either. A third option is to slash government services. But which services? How about Social Security? Do you really want to see Grandma panhandling? Congress can't agree on a budget for good reason: there is no good place to cut.

Fortunately, there is a more satisfactory solution. We can sit back, relax and concede that Cheney was right. Deficits aren't necessarily a bad thing! They don't matter, so long as they are at very low interest rates; and they can be kept at these very low rates either by maintaining our triple A credit rating or by borrowing from the Fed essentially interest-free.

The Yin and Yang of Money

Under our current monetary scheme, debt and deficits not only don't matter but are actually necessary in order to maintain a stable money supply. The reason was explained by Marriner Eccles, governor of the Federal Reserve Board, in hearings before the House Committee on Banking and Currency in 1941. Wright Patman asked Eccles how the Federal Reserve got the money to buy government bonds.

"That is what our money system is," Eccles replied."If there were no debts in our money system, there wouldn't be any money."

That could explain why the US debt hasn't been paid off since 1835. It has just continued to grow and the economy has grown and flourished along with it. A debt that is never paid off isn't really a debt. Financial planner Mark Pash calls it aNational Monetization Account. Government bonds (or debt) are "monetized" (or turned into money). Government bonds and dollar bills are the yin and yang of the money supply, the negative and positive sides of the national balance sheet. To have a plus-1 on one side of the balance sheet, a minus-1 needs to be created on the other.

Except for coins, all of the money in the US money supply now gets into circulation as a debt to a bank (including the Federal Reserve, the central bank). But private loans zero out when they are repaid. In order to keep the money supply fairly constant, some major player has to incur debt that never gets paid back; and this role is played by the federal government.

Here is why. Private banks always lend at interest, so more money is always owed back than was created in the first place. In fact, investors of all sorts expect more money back than they paid. That means the debt needs to be not only maintained, but expanded, to keep the economy functioning. When the Fed "takes away the punch bowl" by tightening credit, there is insufficient money to pay off debts; people and businesses go into default; and the economy spins into a recession or depression.

Maintaining a deficit is particularly important when the private lending market collapses, as it did in 2008 and 2009. Then debt drops off and so does the money supply. Too little money is available to buy the goods on the market, so businesses shut down and workers get laid off, further reducing demand, precipitating a recession. To reverse this deflationary cycle, the government needs to step in with additional public debt to fill the breach.

Conclusion

Debt and Productivity

The US federal debt that is setting off alarm bells today is about 60 percentof Gross Domestic Product (GDP), but it has been much higher than that. It was 120 percent of GDP during World War II, which turned out to be our most productive period ever. The US built the machinery and infrastructure that set the nation up to lead the world in productivity for the next half century. We, the children and grandchildren of that era, were not saddled with a crippling debt, but lived quite well for the next half century. The debt-to-GDP ratio got much lower after the war, not because people sacrificed to pay back the debt, but because the country got so productive that GDThat could explain the anomaly of Japan, the global leader today in deficit spending. In aCIA Factbook listof debt-to-GDP-ratios of 132 countries in 2010, Japan topped the list at 226 percent. So, how has it managed to retain its status as the world's third-largest economy? Its debt has not crippled its economy because:

1.the debt is at very low interest rates;
2. it is owed to the people themselves, not to the International Monetary Fund or other foreign creditors; and
3.the money created by the debt has been used to produce goods and services, allowing supply and demand to increase together and prices to remain stable.

The Japanese economy has been called "stagnant," but according to areviewby Robert Locke, this is because the Japanese aren't aiming for growth. They are aiming for sustainability and a high standard of living. They have replaced quantity of goods with quality of life. Locke wrote in 2004:

"Contrary to popular belief, Japan has been doing very well lately, despite the interests that wish to depict her as an economic mess. The illusion of her failure is used by globalists and other neoliberals to discourage Westerners, particularly Americans, from even caring about Japan's economic policies, let alone learning from them. [And] it has been encouraged by the Japanese government as a way to get foreigners to stop pressing for changes in its neo-mercantilist trade policies."

Settlements raised bank capital requirements. The Japanese banks then tightened credit and lent only to the most creditworthy borrowers. Private debt fell off and so did the money supply, collapsing the stock market and the housing bubble. The Japanese government then started The Japanese economy was doing very well until 1988, when the Bank for International spending and it got the money by borrowing; but it borrowed mainly from its own government-owned banks. The largest holder of its federal debt is Japan Post Bank, a 100 percent government-owned commercial bank that is now thelargest depository bank in the world. The Bank of Japan, the nation's government-owned central bank, also funds the government's debt. Interest rates have been lowered to nearly zero, so the debt costs the government almost nothing and can be rolled over indefinitely.

See charts below (at link).

Japan's economy remains viable, although its debt-to-GDP ratio is nearly four times that of the United States, because the money does not leave the country to pay off foreign creditors. Rather, it is recycled into the Japanese economy. As economist Hazel Henderson points out, Japan's debt is twice its GDP only because of an anomaly in how GDP is calculated: it omits government-provided services. If they were included, Japan's GDP would be much higher and its debt-to-GDP ratio would be more in line with other countries.' Investments in education, health care and Social Security may not count as "sales," but they improve both the standard of living of the people and national productivity. Businesses that don't have to pay for health care can be more profitable and competitive internationally. Families that don't have to save hundreds of thousands of dollars to put their children through college can spend on better housing, more vacations, and other consumer items.

Turning the National Debt Into a Public Utility

Locke calls the Japanese model "a capitalist economy with socialized capital markets." The national debt has been "monetized" - turned into the national money supply. The credit of the nation has been turned into a public utility.

Thomas Hoenig, president of the Kansas City Federal Reserve, maintains that the largest US banks should be put in that category as well. At the National Association of Attorneys General conference on April 12,he said that the 2008 bank bailouts and other implicit guarantees effectively make the too-big-to-fail banks government-guaranteed enterprises, like mortgage finance companies Fannie Mae and Freddie Mac. He said they should be restricted to commercial banking and barred from investment banking.

"You're a public utility, for crying out loud," he said.

The direct way for the government to fund its budget would have been to simply print the money debt-free. Wright Patman, chairman of the House Banking and Currency Committee in the 1960s, wrote:

"When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far.... [I]t is absolutely wrong for the Government to issue interest-bearing obligations.... It is absolutely unnecessary."

But that is the system that we have. Deficits don't matter in this scheme, but the interest does. If we want to keep the interest tab very low, we need to follow the Japanese and borrow the money from ourselves through our own government-owned banks, essentially interest-free. "The full faith and credit of the United States" needs to be recognized and dispensed as a public utility.

_____________________________________________
This is a very complex subject. One must read a variety of views to BEGIN to understand. This writer is known as an expert.

Avoid listening to anyone who tells you something simplistic about a complicated subject; those that say this is all you have to know about ......

Guess who owns that discussion - the simple, mindless one. Conservatives, who use it to get their agenda imposed on us. They don't understand it either but they don't care. It's only a tool to get power. Evidence? Have you heard how many 'freshman' tea baggers don't understand what will happen if we default? They just want to be 'tough'. You know, show who's boss. Cut the budget because IT'S SCARY AND WE HAVE TO DO SOMETHING!

The Heartless Way Conservatives Treat Young Women Who Choose to Have Babies

If you get pregnant outside of their very narrow parameters of what's acceptable (middle class, married, white), conservatives simply want you to suffer for it.

AlterNet / By Amanda Marcotte

Last week, “The Rachel Maddow Show” ran a story on Michigan politics that had footage so distressing it apparently created an avalanche of mail for the show. The new Republican governor of Michigan, Rick Snyder, signed a law that allows the state to functionally dissolve local governments and hand them over to “emergency managers,” who are using their new powers to enact a series of wish list items for conservatives under the guise of fiscal responsibility. It’s a project that’s been dubbed “fiscal martial law”, and the latest victims were a group of school girls that were manhandled by police and arrested, all because they wanted to keep their current educational opportunities. Maddow’s show ran the unnerving footage of police shoving, cuffing and pushing around teenage girls, while the sirens wailed over the girls’ shouts and cries.

The girls were arrested for holding a sit-in to protest the closing of their school, the Catherine Ferguson Academy, which was established to serve students who are pregnant or mothering. The school provides day care and parenting classes, and focuses on getting students to college and giving them skills that help future self-sufficiency. Supposedly “pro-life” conservatives should not only be supporting this school, but demanding that every high school in the country provide these services to teenage mothers. After all, these girls did what anti-choicers ask of them. They chose to have their babies. And now the very same conservatives that wax sentimental about “choosing life” are working to shut down the educational opportunities of young women who did what anti-choicers want, by having their babies.

The imminent shut down of Catherine Ferguson demonstrates the emptiness of Republican claims that they oppose reproductive rights because they value life. Instead, Republican policies are rooted in a sadistic desire to punish and control, and to deprive women---especially young women, poor women, and women of color---of any opportunities whatsoever. Lynn Paltrow, the executive director of the National Advocates for Pregnant Women, explained, “I think the range of actions being taken against pregnant women reflects what has been underlying attacks on Roe and abortion all along, a fundamental disrespect for pregnant women, regardless of what decisions they make. The combination of attacks that seek to deprive women not only of reproductive health care but food (through cuts to the WIC program) as well as education for pregnant teens makes clear that it is pregnant women's personhood and not just their right to choose that is being targeted.”

Michigan Republicans are trying to put pregnant women in a damned-if-you-do, damned-if-you-don’t situation. If you don’t want to have the baby, good luck to you trying to get an abortion in Michigan. The state already has been given an F by NARAL, especially for heavy restrictions on abortion access for young and low income women. The state also has onerous waiting periods, complete with false information about the risks of abortion. But some Republican legislators don’t think women who want to terminate pregnancies are hassled enough. State senator David Robertson has introduced a bill that would require abortion clinics not only to do an ultrasound, but to provide hard copy pictures of it to the patient before she’s allowed to have her abortion. This adds to the expense of an abortion, as well as creates time constraints that make it harder for clinics to serve all their patients with the best level of care. It also treats pregnant women making difficult decisions like they’re addled-minded morons, demonstrating further the amount of contempt that conservatives have for the personhood of pregnant women.

But just because they don’t want you to say no to having a baby means that Michigan Republicans want you to say yes, either, as the girls at Catherine Ferguson have learned. Young women trying to parent and finish high school face often insurmountable challenges. For one thing, being pregnant or mothering in high school is heavily stigmatized, and they face discrimination from school officials, teachers, and their fellow students. They also face a series of pragmatic problems. Balancing school and motherhood requires childcare, something most high school students can’t even begin to access or afford. Being a parent requires money, too. Trying to balance work, parenting, and school proves too much for many young mothers. Fewer than half of teenage mothers go on to complete high school.

Separate schools for teenage mothers draw criticism from people on the left as well as the right. Liberal critics say that teenage mothers should be integrated into their regular high schools, and the services offered at specialty schools should be available at ordinary high schools. While these critics have a point, the cold fact of the matter is that as long as services for teenage mothers are not integrated into regular schools, places like Catherine Ferguson serve a role. This particular school has a 90% graduation rate, more than twice the national average for teenage mothers. Most importantly, the girls themselves cherish the school, which is why they put their bodies on the line in order to save it.

Gov. Snyder claims to be “firmly pro-life”, but his governing decisions that led to multiple young mothers getting arrested because they want a better lives for themselves and their small children shows he is anything but. He and other Republicans who oppose reproductive rights are better understood as anti-choice and anti-woman. Their stance isn’t pro-fetus, but pro-punishment. If you get pregnant outside of their very narrow parameters of what’s acceptable (middle class, married, white), they simply want you to suffer for it. If your decision is terminate the pregnancy, they will make you suffer. But as the girls at Catherine Ferguson are learning, if you choose to have the baby, you will also be made to suffer. You may even find yourself hauled away in handcuffs if you dare suggest you deserve to have something as simple as a high school education.

Interesting article on debt and productivity though I would have liked to seen two other variables addressed. One, the US$ is the world's reserve currency, and two, we have outside creditors in Japan and China. I'm still cautious of this scheme. It might be overly simple, but if it's too good to be true, it probably isn't.

Bin Laden

(SNIP)

A LONG SEARCH: Although Bin Laden gained most of his notoriety from the 9/11 attacks, he actually had been sought even before those events for his role in the bombings of U.S. embassies in Africa, the attack on the U.S.S. Cole, and the first attack on the World Trade Center. Following the 9/11 attacks, President George W. Bush failed to capture him in Afghanistan -- as even his administration conceded that they failed to capture Bin Laden at the battle of Tora Bora -- and later started a war in Iraq that mis-directed U.S. resources to an unnecessary and disastrous war. Just six months after 9/11, Bush was already telling people that he "doesn't spend that much time" on seeking Bin Laden. The Weekly's Standard's Fred Barnes reported in 2006 that the president told him "Bin Laden doesn't fit with the administration's strategy for combating terrorism." Yet yesterday a number of major conservatives gave Bush praise anyway. Former Bush advisor Karl Rove said that "the tools that President Bush put into place -- GITMO, rendition, enhanced interrogation, the vast effort to collect and collate this information -- obviously served his successor quite well." Heritage Foundation President Edwin Feulner wrote that "Bin Laden's elimination vindicates U.S. strategy in the region, started under President George W. Bush." On Se ptember 10, 2010, President Obama told a reporter at a news conference that "capturing or killing bin Laden and Zawahiri would be extremely important to our national security."

(SNIP)

TORTURED CONCLUSIONS: Shortly after the death of Bin Laden, many right-wing commentators began crediting torture for the intelligence that led to finding the terrorist leader. Bush torture program architect John Yoo said that Bin Laden's death was "yet another sign of the success of the Bush administration's war on terror policies" and that the Al Qaeda courier who gave the intelligence was subjected to "enhanced interrogation methods." Former Bush speechwriter Marc Thiessen also said that the intelligence came from the CIA's "enhanced interrogation program." The National Review's Dan Foster wrote that "it's clear that we couldn't have had this outcome without Bush-era counter-terror policies...Obama was wrong about the usefulness of...the interrogation methods they pursued." Yet yesterday, in an interview with Newsmax, Bush Secretary of Defense Donald Rumsfeld said that the courier was not subjected to waterboarding or other torture methods. Additionally, the Associated Press reports that Al Qaeda "number three" Khalid Sheik Mohammed "did not reveal" information that led to Bin Laden's location "while being subjected to the simulated drowning technique known as waterboarding, former officials said." He identified them many months later under standard interrogation."

(SNIP)

Supporters of President Bush "are irked that the White House isn't doing more to share the glory" of killing Osama bin Laden, Politico reports. Numerous top Bush officials are making the case publicly that Bush policies played a key role, "and dozens of statements Monday from Republican officeholders mentioned Bush's role after 9/11."

Americans don't remember much re politics. It's easy to fool them and politicians know that.
So they can say anything, if enough time has passed. That's why these pukes quoted above say Bush should get credit.

NOPE! Tora Bora, anyone. Even Rumsfeld, above says no.

Folks, everyday we are bombarded with lies, misdirection and fear, all calculated to make us compliant with what the purveyors want.

In the Wake of bin Laden’s Death, Jim DeMint Says President Obama Lacks “Commitment” to Defense

Watching the right’s rhetorical acrobatics over the past few days has been really quite amusing. Check out this strained exchange between Hugh Hewitt and Jim DeMint (T-SC).

HH: Senator, there’s an insipient sort of politicization of this, with people speculating on its impact on President Obama’s 2012 reelection. I think it’s untoward, but it’s also everywhere. What do you think about this?

JD: Well, I appreciate the fact that he has pursued this. Obviously, we’ve got to give some credit to George Bush for making this a decade-long commitment. But we’ve got to give President Obama his due. He continued to pursue it, despite pressure from the left. And he did what even some Republicans said he shouldn’t do, and that’s stage an attack in Pakistan. So I’m here to give him credit for what happened, but I do think we need to realize that the Navy SEALs, the expertise that we had, has been developed over a long period of time, with our commitment to our defense and our military. That’s not something we’re seeing from this administration. So that is a missing link, but we need to remember the intelligence gathered to make this happen came from some of the interrogation centers that have now been dissolved.

DeMint doesn’t say specifically what Obama’s done to undermine the military, but maybe he’s referring to the fact that Obama retained George W. Bush’s Secretary of Defense and all his top generals while increasing defense spending.

Thanks to Decades of Conservative Spin, Americans Are Hopelessly Confused About Taxes

Spending and the Deficit.

Conservatives have spent 30 years divorcing the taxes we pay from the services they finance -- no wonder the public doesn't know where their tax dollars go.

A few weeks back, Paul Krugman, a Nobel Prize-winning economist, felt compelled to take time out of what is presumably a busy schedule to explain that “taxes are, first and foremost, about paying for what the government buys.” That he felt compelled to do so is a sad reflection of the state of our economic discourse.

A good number of Americans are hopelessly confused about taxes, deficits and the debt. And it's no mystery why – conservatives have spent 30 years divorcing the taxes we pay from the services they finance. They've bent themselves into intellectual pretzels arguing that cutting taxes – on the wealthy – leads to more revenues in the coffers. They've invented narratives about taxes driving “producers” to sunnier climes, killing jobs by the bushel, and relentlessly spun the wholly false notion that we're facing “runaway spending” and are “taxed to death.”

And they've had great success. But they haven't done it alone – credit the media with an assist for muddying the waters around our fiscal situation. Consider a poll released this week by the highly respected Gallup organization. Their headline reads, “Americans Blame Wasteful Government Spending for Deficit.” Is that true? Well, here were the options – the only options – that respondents were offered:

Which do you think is more to blame for the federal budget deficit: Spending too much on government programs that are either not needed or wasteful, or not raising enough taxes to pay for needed programs? (Emphasis added.)

“Accordingly,” says Gallup, “Americans generally favor spending cuts rather than tax increases as the way for Congress to reduce the deficit going forward.” According to that distorted narrative – that false choice -- of course they do. I'm sure the results of a poll asking if people would prefer an ice cream sundae or a sharp stick in the eye would prove equally conclusive (not to mention bipartisan).

The problem is that after decades of anti-government rhetoric, there's very little in the way of “wasteful spending” left unless you look hard at the military budget, which neither party seems willing to do in any serious way.

We are, simply, under-taxed relative to the things we want the government to do. According to the Congressional Budget Office, the biggest driver of the projected deficits over the next ten years are not the wars in Afghanistan and Iraq or social safety net programs; it's the Bush tax cuts.

Last year, the revenues collected by the federal government were the lowest since 1950 (as a share of our overall economic activity). But it's important to understand that back then, we had no medicare program. The population was younger, and health care costs were a fraction of what they are today – in 1960, just before Medicare was established, we spent 5 percent of GDP on health-care; today, we spend about 17 percent.

As economist Dean Baker noted, if we spent the same per person on health-care as any one of the 35 countries with longer average life expectancies, our deficits would turn into surpluses in a few short years.

Offering health-care to children, seniors and the poor is anything but “not needed.” Is it wasteful? Health-care costs have skyrocketed for years in this country, but more slowly in the public sector than in the private.

While we're clearly under-taxed, the right's anti-tax crusaders have largely had their way shaping the discourse. About 7 in 10 Americans want the deficit to be addressed. Many believe that running a large, short-term deficit is hurting the economy when the opposite is true. We lost $14 trillion in wealth in the financial crash, and that – along with high unemployment and an ongoing foreclosure nightmare – has led to a huge drop in consumer demand. Public spending has, to a painfully inadequate degree, filled some of the gap.

Give the conservative message machine its due credit. While Americans really like the specific things government does – they want low-cost student loans, having fire-fighters and cops on the beat and a whole slew of other services – the abstract idea of “limited government” is quite appealing.

The right's victory in separating taxes from the services they pay for is apparent when citizens are asked what they'd like to see cut in order to cut that deficit. In January, Gallup released a poll on those specifics. They asked which of nine areas of government services they'd like to see cut. Only cutting foreign aid – which represents about two percent of the federal budget – met with the approval of a majority of those surveyed. Even majorities of Republicans opposed cuts to everything but foreign aid and arts funding.

Taken together, this shows how difficult it is for law-makers to arrive at good public policies. Their constituents wants their cake, they want to eat it, but they don't think they need to pay the tab for it. Politicos offer tax cuts to get themselves elected, but then face outraged constituents when they try to cut services. Small wonder that we've only managed to balance the budget in one brief period during the boom years of the 1990s.

We do face serious issues in this country. We need a serious debate about how best to solve them. But we're having that debate in a democracy populated by citizens who have little or no clue where their tax dollars go. And you can credit the anti-tax crusaders and their habitual mendacity for that sorry state of affairs.

This essay gets to the heart of the matter; propaganda. It works. When you are told something, even something outrageous, there is a good chance you will come to believe it if you hear it many times. History is replete with examples.

When people are asked if they want things they consider important cut they say no. But when things are mentioned in a vague way, mixed with scary emphasis, they tend to change their minds. Propaganda and misdirection.

Oil baron David Koch has made it clear he is no fan of President Barack Obama, but Wednesday night he provided a fresh reason for his anti-Obama views: the president is frightening.

Obama is "a hardcore socialist," Koch told the New York Magazine [1] at a spring ball, "and he’s marvelous at pretending to be something other than that, but that is what I believe he truly is, a hardcore socialist. He’s scary to me."

Koch and his brother Charles are owners of the energy company Koch Industries. The brothers were principle financiers of Wisconsin's Republican Governor Scott Walker and the tea party movement. They are also supporters of free market groups like Americans for Prosperity, the Cato Institute, the Competitive Enterprise Institute, and the Reason Foundation.

In addition to being a scary hardcore socialist, David Koch said that Obama deserved no credit for the operation that tracked down and killed Osama bin Laden.

"He just made the decision, it was obvious where the guy is," he told the magazine. "He was one of the worst terrorists organizing attacks on the United States. I mean, no president in his right mind would not approve that decision to go eliminate him."

I have known many Ph.D s. I have known many wealthy people. These remarks correspond to my experience. Money and formal education does NOT ensure people will be intelligent or intellectual. The Kochs are idiots - and dangerous because they have money. That's a scientific position.

Thanks for the discourse on taxes and spending. From my own perspective, I do feel badly over taxed. My own case is pretty much transparent in another thread. And as I have stated, if I had more of the money I earned, I would spend more. In fact, I just took a beating last night from my wife who wants the new doors I spoke about (or a new house), and she wants it pretty much, right now (as well as a vacation - "other people take vacations.........."). What she doesn't want to believe is that IF either her or I lose our job, we're done in 6 to 12 months.

This is the heart of the matter, "Taken together, this shows how difficult it is for law-makers to arrive at good public policies. Their constituents wants their cake, they want to eat it, but they don't think they need to pay the tab for it. Politicos offer tax cuts to get themselves elected, but then face outraged constituents when they try to cut services."

Need proof? Just look at the republican party. They get elected on deficit rhetoric, and now when the rubber meets the road, most everyone is crying in outrage in some form or another.